Trump Administration Should Clearly Reject Socialized Medicine

The WasteWatcher

August 12, 2019 — Elizabeth Wright

When it comes to socialized medicine, the Trump administration is speaking out of both sides of its mouth. On the one hand, Centers for Medicare and Medicaid Services (CMS) Administrator Seema Verma attacks Medicare for All, or a public option, as dangerous because there is no need to compete on price or quality, as private insurers must do. Government-run healthcare would have endless resources as it can simply turn to the taxpayers for more money, regardless of quality.

On the other hand, Health and Human Services (HHS) Secretary Alex Azar and President Trump are supporting socialistic policies by attempting to implement an international pricing index (IPI) for Medicare Part B and announcing a proposal to have the Food and Drug Administration (FDA) develop and oversee a process that would allow the importation of certain price-controlled drugs from Canada or allow manufacturers to import price-fixed versions of their FDA-approved drugs sold overseas. These policies are supposedly being undertaken to encourage “competition,” but instead are leaving free-market fiscal conservatives scratching their heads.

The importation plan itself contradicts prior condemnation of that concept by Secretary Azar and President Trump. In May 2018, Secretary Azar said that importing cheaper drugs from Canada was a “gimmick” and that the Congressional Budget Office said it “would have no meaningful effect.” President Trump remarked during his October 2018 announcement of the US-Mexico-Canada Trade Agreement that, “We want our drugs to be made here … we don’t like getting them from foreign countries … we don’t know … how they’re being made.”

In her March 4, 2019 comments before the American Federation of Hospitals, Administrator Verma said, “Let me be clear, expanding Medicare will ruin the program for the seniors it was created to serve, and it would decrease the quality of care that we, as Americans, have come to expect as the world's leader in innovative health care.” She added, “doubling down on government and mimicking the failed socialist healthcare systems of Europe that ration and restrict care, where patients face long periods of time for care, is not the answer.” She fully appreciates the fact that public programs, like Medicare for All, would bring innovation to a standstill, as it has done in other countries that utilize single-payer, socialistic healthcare.

The administration’s use of an IPI in Medicare Part B and the importation of drugs from Canada would mimic price control structures that have ruined biopharmaceutical innovation in Canada. According to the Association of the British Pharmaceutical Industry, the United States “retains the highest share of R&D expenditure” at 58 percent, while Canada is merely a blip at 1 percent. America’s closest competitor in 2016 was Japan at 13 percent.

Designing either of the convoluted plans would take time as they would go through long regulatory process and legal challenges. The drug importation policy may never be implemented due to the cost of federal and state bureaucracies needed to guarantee safety.

Canada has warned the U.S. that it opposes any plans to export its price-controlled drugs across the border, citing concerns over drug shortages for its own citizens. As Secretary Azar noted in his May 2018 speech, “Canada’s drug market is simply too small to bring down prices here … Canada simply doesn’t have enough drugs to sell them to us for less money, and drug companies won’t sell Canada or Europe more just to have them imported here.”

In the meantime, dishonest actors will take advantage of the announcement, ignore the regulatory delay, and falsely claim the Trump administration is allowing cheaper drugs to be imported from Canada. They will set up faux websites or small, mobile pharmaceutical shops to encourage patients to purchase their fraudulent “Canadian” medications, and someone is going to get hurt in the process.

A better option to encourage competition and lower drug costs is for the FDA to speed up generic drug approvals, implement modern processes to shorten clinical trials for new drugs, and for Congress to create better trade deals to ensure foreign countries contribute to U.S.-funded research instead of continuing to freeride on our biopharmaceutical innovation.

When it comes to socialized medicine, the Trump administration should be united in speaking against all such policies rather than undermining their arguments by using them in drug-pricing proposals or encouraging any similar scheme that would hurt taxpayers and consumers.

The WasteWatcher is the staff blog of Citizens Against Government Waste (CAGW) and the Council for Citizens Against Government Waste (CCAGW). For questions, contact blog@cagw.org.